The Commission stated this in a public notice released on Friday, noting inadequate compliance with its directive.

It said those who decided not to register may engage in “unwholesome activities.”

This development came as the Fintech business owners under the aegis of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) challenged the CAC’s registration directive in court, insisting that the mandatory registration was illegal.

Providing an update on the registration after the deadline, the CAC in the public notice said, “The Corporate Affairs Commission wishes to remind the general public particularly Fintech operators also known as Point of Sale (POS) operators, that the 60-day deadline given in daily newspaper publications of July 7 2024, for the registration of such businesses expired on September 5, 2024.

“The Commission notes inadequate compliance with the directive for formalisation when viewed from the background of the large number of PoS operators in the country. Those who have taken steps to formalise in line with the Commission’s directive are commended for their positive attitudes.

“Recalcitrant operators have refused to adhere to the advice for formalisation due possibly, to engagements in unwholesome activities or for some reasons best known to them.

“We are to make it clear that the Commission is working with law enforcement agencies and other relevant stakeholders to deploy comprehensive enforcement and sanction framework that may include not only possible shutdown but other severe legal consequences.”

The CAC announced in May that PoS agents of major Fintechs in Nigeria including OPay, Palmpay, and Moniepoint, among others, were given deadline of July 7, 2024, to register their business.

Hussaini Magaji, the registrar-general of the CAC, who announced this said this was the agreement with the PoS operators after a meeting in Abuja.

According to Magaji, the registrations are also in line with the legal requirements and the directives of the Central Bank of Nigeria (CBN).

The Commission, however, later extended the deadline by 60 days to September 5, 2024. The extension came with a warning that any operator that failed to meet the new deadline would face prosecution and risk losing the business.

Meanwhile, AMMBAN is insisting that the registration requirements imposed by CAC violated the provision of the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2004, which “explicitly states that the commission has no jurisdiction over individuals not operating as a company.

According to the General Secretary of AMMBAN, Oluwasegun Elegbede, the matter is already in court and the court has scheduled this September for hearing.

“The court will have to intervene in the interpretation of the quoted section of the CAMA if individuals operating as a sub-agent (likened to a bank branch) must register with CAC,” Elegbede added.

This directive aims to formalize the operations of PoS businesses across the country, boosting regulatory compliance and promoting financial inclusion.

However, for many PoS operators, this new requirement poses significant challenges, both financially and logistically. As micro-businesses, already grappling with economic uncertainties, the stringent deadline could threaten their survival and, by extension, the broader goal of financial inclusion in Nigeria.

PoS operators have become crucial players in Nigeria’s financial landscape, particularly in rural and underserved urban areas.

They provide essential services such as cash withdrawals, deposits, bill payments, and transfers, bridging the gap between the unbanked population and formal financial institutions. Their accessibility and convenience have made them indispensable, particularly as the country pushes towards a cashless economy.

Reports indicate that there are close to a million registered PoS terminals in the country.

According to Statista, “As of 2023, PoS payments in Nigeria were worth over 860 billion Nigerian naira, registering an increase compared to the previous years reviewed. Between 2015 and 2023, the number of POS payments rose significantly.”

These numbers tell a story. PoS operators are today an integral part of the financial inclusion value chain. So, efforts should be made to ensure the sustainability of the sub-sector.

The real issue is that the tight registration deadline poses challenges to the operators.

Number one, registering a business with the CAC involves several costs, including registration fees, documentation, and sometimes legal services. Many PoS operators, who operate on thin margins, may struggle to afford these expenses. For micro businesses that often subsist on daily earnings, diverting funds towards registration could mean a significant financial setback. What would likely happen is that many will not bother to register and may thus close shop.

Two, the July 7, deadline is too short. It provides the operators with a limited timeframe to complete the registration process. Given the bureaucratic hurdles often associated with such processes in Nigeria, this timeline is impractical for many.

The urgency compounds the stress on operators who must balance their daily operations with the demands of registration. They may be forced to pay above the usual rate because of the urgency of the situation.

Thirdly, many PoS operators are not fully aware of the registration requirements or the steps involved. Without adequate support and clear guidance from the CBN or CAC, they may find the process overwhelming.

The absence of targeted awareness campaigns exacerbates this issue, leaving many operators in the dark. The National Orientation Agency (NOA) has a role to play here.

The biggest challenge is the disruption of business activities. The focus on meeting the registration deadline may lead to operational disruptions. PoS operators might need to temporarily halt their services to manage the registration process, affecting their income and the communities that rely on their services.

It should not be this way. First and foremost, there must be some sort of financial assistance program. Yes, the government, in collaboration with financial institutions, could establish a financial assistance program to support PoS operators with the costs of registration.

This could take the form of grants, subsidized loans, or fee waivers. Such assistance would alleviate the financial burden and ensure compliance without jeopardizing operators’ livelihoods.

Secondly, the regulator should immediately extend the deadline. Extending the deadline would provide PoS operators with a more realistic timeframe to complete the registration process. An extended period would allow operators to plan and save for the costs involved, reducing the risk of financial strain. A 12 to 24-month window sounds reasonable.

In addition, massive awareness campaigns and support have to be instituted. The comprehensive awareness campaigns are crucial to inform PoS operators about the registration requirements and process.

The CBN and CAC could collaborate to disseminate information through various channels, including social media, community meetings, and local radio stations.

Additionally, establishing support centres or helplines to guide operators through the registration process would be beneficial.

The CAC should streamline the registration process. The thinking is that simplifying the registration process could encourage compliance.

Streamlining documentation requirements and reducing bureaucratic red tape would make the process more accessible. Online registration portals with clear, step-by-step instructions could also expedite the process.

Furthermore, community engagement and partnerships must come into play. Engaging with community leaders and local organisations can help mobilize PoS operators and provide them with the necessary resources and information.

Partnerships with non-governmental organisations (NGOs) and business associations could also facilitate workshops and training sessions to aid the registration process.

The CBN’s directive for PoS operators to register with the CAC is well-intentioned. It aims to formalize and regulate the sector.

However, without addressing the financial and logistical challenges faced by these micro businesses, the directive could have adverse effects on the economy.

Ensuring the sustainability of PoS operations is essential for maintaining financial inclusion and supporting Nigeria’s broader economic goals.

This was revealed by the Central Bank of Nigeria (CBN) during a meeting between Fintechs and Hussaini Magaji (SAN), the registrar-general/chief executive officer (CAC), in Abuja on Tuesday.

Speaking at the event, the CAC boss said the two-month timeline to register their agents, merchants, and individuals with the commission, was “in line with legal requirements and the directives of the Central Bank of Nigeria”.

“The measure aims at safeguarding the businesses of Fintech’s customers and strengthening the economy,” a statement titled ‘CAC, PoS OPERATORS AGREE TO TWO-MONTH DEADLINE TO REGISTER THEIR AGENTS AND MERCHANTS TO STRENGTHEN THE FINTECH INDUSTRY‘ issued by the CAC added.

He stressed that the action was equally backed by Section 863, Subsection 1 of the Companies and Allied Matters Act, CAMA 2020, and the 2013 CBN guidelines on agent banking.

Magaji explained that the timeline for the registration which will expire on July 7, 2024, was not targeted at any groups or individuals but aimed at protecting businesses.

Several speakers from the Fintech industry pledged to collaborate with the commission to ensure hitch-free implementation of the directive.

Some of them, however, stressed the need for adequate and collective sensitisation, to ensure that the exercise achieved the desired results.

Tokoni Peter, the special adviser to the President on ICT Development and Innovation, in his remarks, pledged to ensure smooth facilitation of the process in line with the Renewed Hope Initiative of the present administration.

The representatives of Opay, Nomba, Palmpay Ltd, PayStack, FairMoney MFB, Moniepoint, and TeasyPay present at the event, later signed up for a document to support the project.

[Credit: ChannelsTV]